Deciphering Propiedad Horizontal: A Legal Specialist's Guide to Safeguarding Your Investment in Ecuadorian Developments

As a certified Ecuadorian Real Estate Attorney and Land Specialist, my practice is dedicated to one primary objective: securing my clients' investments by identifying and neutralizing legal risks before they materialize. One of the most common investment vehicles for foreign nationals, the purchase of a unit within a development governed by Propiedad Horizontal (PH), requires a level of forensic due diligence that goes far beyond a standard property review. This framework, while similar to a condominium or strata title, possesses uniquely Ecuadorian complexities. Failure to navigate them can expose investors to significant financial liabilities and title defects. This guide provides an expert-level framework for conducting that essential due diligence.

The Legal Architecture of Propiedad Horizontal (PH)

The Propiedad Horizontal regime is principally governed by Ecuador’s Civil Code and the Código Orgánico de Organización Territorial, Autonomía y Descentralización (COOTAD). It is a legal structure that divides a single property (inmueble matriz) into individually-owned units (unidades privativas or alícuotas) and common areas (bienes comunes). Each unit owner holds exclusive, registered title to their private unit and an inseparable, undivided percentage of co-ownership (proindiviso) in the common elements.

The legal birth of a PH development occurs when the developer drafts and notarizes the Escritura Pública de Declaratoria de Propiedad Horizontal (Public Deed of Declaration of Horizontal Property). This foundational document, which includes architectural plans and the Reglamento Interno (Internal Bylaws), must be approved by the corresponding municipal planning office and, critically, inscribed in the public record at the canton’s Registro de la Propiedad (Property Registry). Only after this inscription do the individual units legally exist and become eligible for separate title registration.

The Non-Negotiable Due Diligence Dossier

A superficial document review is insufficient. As your legal counsel, I demand and scrutinize the following documents to build a complete picture of the property's legal and financial health.

Escritura Pública de Declaratoria de Propiedad Horizontal (Public Deed of PH Declaration): This is the master deed. My review confirms that it was properly approved by the municipality and, most importantly, is registered. I verify the specific alícuota (percentage of co-ownership) assigned to your unit, as this determines your share of common expenses.
Reglamento Interno de Copropiedad (Internal Co-ownership Bylaws): Often part of the master deed, these are the binding rules of the community. I analyze them for restrictive covenants, rules on renovations, pet policies, and the precise powers of the administrator and the General Assembly of Co-owners (Asamblea General de Copropietarios).
Certificado de Gravámenes (Certificate of Liens and Encumbrances): This is the single most critical title document. To obtain this from the Registro de la Propiedad for a specific unit in, for example, the Canton of Salinas, my office must provide the registrar with the specific código catastral (cadastral code) for that individual unit. The certificate must be "actualizado" (current, typically issued within 30-60 days). It will reveal any registered mortgages (hipotecas), liens (embargos), lawsuits (demandas), easements (servidumbres), or other encumbrances against that specific title. An unencumbered certificate is a prerequisite for any secure transaction.
Certificado de No Adeudar al Municipio (Municipal No-Debt Certificate): Issued by the municipal finance department, this confirms that the annual property taxes (impuestos prediales) and municipal service fees (tasas de servicios) are paid in full. In Ecuador, municipal tax debt constitutes a preferential lien on the property.
Certificado de No Adeudar a la Administración (Administrator's No-Debt Certificate): This document, issued and signed by the legally appointed administrator of the PH, certifies that all monthly maintenance fees (alícuotas) for the unit are paid. Hyper-Specific Detail #1: I insist this certificate be dated within 15 days of the planned closing. Furthermore, I advise clients to request the minutes (actas) of the last two General Assemblies. These records often reveal hidden issues, such as pending litigation against the developer, planned special assessments (cuotas extraordinarias) for major repairs, or deep-seated community disputes that won't appear on any official certificate.
Permisos de Construcción y Habitabilidad (Building and Occupancy Permits): For new or recent constructions, I verify that the developer obtained all required building permits and, crucially, the final municipal occupancy permit (Permiso de Habitabilidad or Recepción Final). Without this, the building may not legally be occupied, posing a major risk.

Critical Risks for Foreign Investors (And How to Mitigate Them)

Expat buyers often fall into traps that a seasoned local attorney can spot immediately.

The Unregistered PH Regime: Developers frequently pre-sell units "off-plan" (en planos) using a simple promesa de compraventa (promise to buy/sell agreement). Hyper-Specific Detail #2: This promesa is merely a binding contract to execute a future sale; it does not transfer title. The critical risk is that the developer has not yet completed the expensive and bureaucratic process of legally constituting and registering the Declaratoria de Propiedad Horizontal. If they fail to do so, your unit does not legally exist as an independent property, and you cannot receive a clean title (escritura pública) in your name. Your only recourse would be a lawsuit. My due diligence confirms the PH regime is already registered before any funds are transferred at closing.
The Developer's Master Mortgage (Hipoteca Madre): Developers often finance construction with a global mortgage covering the entire property. When you pay for your unit, the developer is obligated to secure a partial release of that mortgage (liberación parcial de hipoteca) for your specific unit. Hyper-Specific Detail #3: If they fail to do this, your "paid-off" unit remains collateral for the developer's entire loan. Should the developer default, the bank can foreclose on the whole building, including your unit. A proper closing process, managed by your attorney, ensures this mortgage release is executed and registered simultaneously with your purchase deed.
Inheriting Hidden Debts: Under Ecuadorian law, debts for unpaid alícuotas attach to the property, not the previous owner. An outdated or fraudulent administrator's certificate can leave you responsible for thousands of dollars in arrears. This is why independent verification and reviewing assembly minutes are non-negotiable.
Coastal Development Restrictions: Properties in developments near the coast are subject to specific national and municipal regulations. Hyper-Specific Detail #4: Under the Ley Orgánica de Ordenamiento Territorial, Uso y Gestión de Suelo (LOOTUGS) and corresponding municipal ordinances, there is typically a non-buildable zone of 50 meters from the high-tide line (línea de máxima marea). While your unit may not be in this zone, a common area like a pool or social club might be. I verify the development's master plans and municipal approvals to ensure common areas do not violate these coastal protection zones (franjas de protección), which could lead to demolition orders or fines.

The Due Diligence and Closing Protocol

My systematic approach ensures maximum legal security:

Document Procurement & Analysis: Obtain and conduct a forensic review of the entire dossier listed above.
Physical Registry Verification: My team personally visits the canton's Registro de la Propiedad to pull the official records (historia de dominio), cross-referencing the physical books against the digital system to ensure no unregistered liens or recent entries exist.
Municipal Records Audit: We verify the property's cadastral information, tax status, and permit history directly with the municipal planning and finance offices.
Financial Health Assessment: We analyze the PH's financial statements and assembly minutes to assess operational stability and flag potential future liabilities.
Drafting of the Minuta: Once due diligence is cleared, I draft the Minuta de Compraventa, the binding legal contract that contains all terms of the sale. This is reviewed by both parties before being presented to the Notary.
The Closing (Escritura Pública): The Minuta is elevated to a public deed (Escritura Pública) before a Notary Public. At this stage, payment is confirmed, and all parties sign. The Notary verifies the identity of the parties and the legality of the act.
Final Registration: The final, critical step is the immediate inscription of the signed and notarized Escritura Pública in the Registro de la Propiedad. Only upon completion of this registration is the title officially and legally transferred to your name.

⚠️ Expert Warning: The Most Dangerous Assumption

The greatest risk in purchasing a PH unit is assuming that a modern building with a glossy brochure equates to a clean title. This is a catastrophic error. An unregistered PH declaration, an unreleased developer mortgage, or undisclosed common area liabilities are invisible threats that can completely undermine your ownership. The Certificado de Gravámenes protects against existing liens, but it does not protect you from a fundamentally flawed legal structure or future liabilities brewing within a poorly managed administration. A beautiful ocean view is worthless if your claim to the property that enjoys it is legally insecure.

Conclusion

Investing in an Ecuadorian Propiedad Horizontal development offers an exceptional lifestyle and return potential. However, this potential can only be realized when the investment is built on a foundation of legal certainty. A rigorous, expert-led due diligence process is not an expense—it is the most critical insurance policy for your asset. By scrutinizing the legal structure, financial health, and regulatory compliance of the entire development, you transform a potentially risky purchase into a secure, long-term investment.